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How to decrease card not present (CNP) fraud

As predicted, the EMV fraud chargeback liability shift has resulted in a significant drop in counterfeit card present payment transactions. At the same time however, we see a spike in card not present (CNP) fraud.

While EMV adoption appears to be having the desired effect, the overall problem of payment fraud isn’t exactly disappearing. Plus, there’s a new wrinkle: once their payment card has been compromised, consumers are less likely to use that card again. Statistics have all shown that consumers whose payment card is used fraudulently are more likely to use their replacement card less often. The obvious ramification for financial institutions is that replacing customers’ compromised cards may not be enough to rebuild the goodwill lost as a result of fraud.

What can institutions do to build customer trust and encourage card usage? One way is to not even get to the point of having to replace cards, by implementing card controls and robust security solutions.

Card controls continue to gain ground with consumers who are increasingly concerned about the security of their data. U.S. consumers have long expressed interest in enhanced security offerings for their payment cards, with many interested specifically in mobile-based controls to avoid fraud on their debit card accounts.

Card controls give cardholders the ability to restrict usage of their payment card. Restrictions can range from merchant or business type and purchase amount, to geographical location. Consumers especially appreciate being notified of potential fraudulent activity and having the ability to turn their cards on or off– a particularly useful feature to prevent the snowball effect of fraudulent transactions after one goes through successfully.

Card controls like Vantiv’s app MobiMoney work by empowering consumers to be part of the solution in the fight against fraud, with a convenient way to manage their payment cards. Cardholders can set controls that reflect their spending habits, exclude high-risk businesses, limit transactions based on locations, set push notification alerts, text messages, emails or calls regarding suspicious transactions, and turn their card on or off. These types of controls put consumers in the driver’s seat, arming them with the technology that allows them to be the first-line of defense against card fraud.

Financial institutions can also help deflect CNP fraud with a security solution like Worldpay’s. The OmniShield suite is advanced software that creates real-time alerts when fraudulent transactions are suspected. Built on a foundation of neural network modeling, OmniShield constantly assesses individual cardholder behavior and scores payment transactions based on other cardholder purchases. A team of fraud analysts reviews questionable transactions to determine if cardholder alerts are needed. This combination can help reduce the number of unnecessary cardholder alerts by 60 percent while also detecting fraud at a rate three to five times higher than other solutions.